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IPIC seals Dh4bn deal for LNG project

The deal with New Guinea gives it a stake in a major gas project in the country.

Abu Dhabi's International Petroleum Investment Company (IPIC) has concluded its purchase of a Dh4.04 billion (US$1.1bn) bond from the government of Papua New Guinea, giving it a stake in a major liquefied natural gas (LNG) project in the country. The bond is convertible to a 17.6 per cent stake in the Australia-based firm Oil Search, which in turn owns a 30 per cent stake of an LNG facility built with ExxonMobil that will produce between 5 million and 6 million tonnes a year when it starts in 2012.

The deal marks IPIC's first foray into LNG, natural gas cooled to a liquid state that has become a major energy source for east Asian economies. The government-owned energy investment fund first announced its intention to buy the bond at the end of November. "We are very pleased to be participating in the PNG LNG project, which promises to deliver 30 years of clean energy supply to the growing Asia Pacific market," said Khadem al Qubaisi, the fund's managing director.

At the time IPIC said it would acquire the bond, the announcement was widely credited with shoring up confidence in the project, as banks questioned the financial track record of all the participants except ExxonMobil. Other major oil companies had expressed interest in LNG projects in the country, to the north of Australia, but none had followed through, a point Mr al Qubaisi highlighted in his statement.

"IPIC is particularly proud to have executed this transaction, succeeding where a number of oil majors tried and failed," he said. The LNG project is at the front-end engineering and design stage, with a final investment decision expected this year. Gas will be extracted from the remote interior highlands of Papua New Guinea, and transported more than 700km via pipeline to the liquefaction plant.

Mr al Qubaisi said he hoped the deal would "provide a platform for further Abu Dhabi investments" in Papua New Guinea. cstanton@thenational.ae

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